23 January 2020

How to choose your warehouse KPIs for improvement


Identify areas for improvement

A warehouse manager’s role is to oversee key performance indicators (KPIs) which identify and measure progress toward business goals. They are an essential component of any business as they enable companies to rate and record performance over time.

Image Credit

This means of measuring can inform business leaders of the success of the company as well as provide employees with an indication of how they are performing. They can also identify areas for improvement.

It’s important to decide upon which KPIs are best suited to warehouses. Those to consider include inventory accuracy, picking and packing, and customer cycle order time.

Inventory is a major part of industry, and accuracy is an essential KPI. If it’s in any way inaccurate, the costs will rise and the customer satisfaction levels will drop. The costs of carrying a larger inventory than needed, or of agitating customers when the inventory that was indicated as being in stock is actually not, can affect reputation. Barcode systems can track inventory, and management systems can track shipments and manage the ordering process.

The efficiency of receiving should be used as a KPI for warehouses and this should involve received volume, customer refunds, missing and damaged stock, and return to vendor items. Specific KPIs for receiving can include the volume received, accurate receipts percentage, and the time involved in the processing of a receipt. Badly run receiving areas can have a detrimental impact across the whole warehouse. The assessments of this area of the business may indicate the need for more equipment to help with the movement of items within your warehouse. Forklifts can help immensely with this and Used Plant Machinery is a great option when looking to spend less on these kinds of machines, compared to buying new.

Image Credit

Picking and packing process can be measured

KPIs for the picking and packing aspect can involve orders selected per hour, labour costs, and accuracy and speed of this process. Similarly, having a high inventory turnover is beneficial for the warehouse, and it’s useful to compare this rate with industry averages. According to Digital Supply Chain it’s important to ensure that KPIs are met and analysed frequently.

Customer satisfaction can be gauged using indicators such as cycle order time. Customers, when placing an order, like to receive it in a timely fashion. Ensuring delivery times are consistent with other businesses in the industry is key, as are ensuring the entire return process and designated timeline are similar to the ordering process.